Treasury proposal offers clarity on clean fuel credit rules for ethanol producers
The Renewable Fuels Association has welcomed the release of proposed regulations for the Section 45Z Clean Fuel Production Tax Credit by the Treasury Department. The tax credit was authorized under the Inflation Reduction Act and later updated through the One Big Beautiful Bill Act.
“Today’s 45Z proposed rule is a step in the right direction toward providing the clarity and certainty that ethanol producers are seeking. We thank the Treasury Department and Trump administration for listening to the input provided by ethanol producers and other stakeholders," said RFA President and CEO Geoff Cooper.
"The proposal appears to resolve some of the previous confusion around what constitutes a ‘qualified sale,’ and begins to integrate the important improvements to 45Z that resulted from the One Big Beautiful Bill Act, such as the removal of indirect land use change emissions from the carbon intensity scoring framework," said Cooper.
One key improvement included in the proposal is the removal of indirect land use to change penalties from carbon intensity scoring. This change reflects updated evidence and recognizes that corn ethanol does not carry an indirect land use change emissions penalty. The proposal also reflects Congress’s decision to extend the credit and allow eligible feedstocks grown in Canada and Mexico.
Despite the progress, RFA emphasized that several important questions remain unanswered. Ethanol producers are waiting for an updated version of the 45ZCF-GREET model, which will play a major role in determining how emissions are measured. The association also raised concerns about how low-carbon farming practices will be measured at the farm level, how foreign feedstock rules will be enforced, and how energy attribute credits will be handled.
RFA plans to submit formal comments on the proposal and participate in an upcoming Treasury hearing. The association previously urged regulators to adopt rules that reflect real-world farming and biorefining conditions while keeping reporting and recordkeeping manageable.
According to RFA, final rules must create dependable value for producers, encouraging continued investment in renewable fuels while supporting environmental and economic goals.
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